I've got this great feature film idea. How do I raise money for it?
This one's not a technology venture. Many of the issues in answering this question are the same as they involve "other people's money" for a high risk venture hence similar concepts apply.
How much should I raise?
The project cost quoted is $200K, which could be cut down to $70K based on the crew being paid out of future profits. I'm not an expert in the film industry however that's sounds like a tight budget. It'd be worth asking a few industry experts about how far does that get you (and whether it includes budget to take the film to market, as well as produce it).
The answer to the question is simple on face value - raise $200K. While it's good to bootstrap it's always going to cost you more than you think.
Where do I find the money?
This feature film had a short writeup which made it very clear what the story was and who it would appeal to. So we have a film director with a good vision.
My friend will produce it through her design company. They do video for a living. Hence we can assume they know how to make a film.
At this stage no one in this mix has taken a feature film to market. Hence there will be a significant leap of faith in those involved.
The combination of investors you're looking for are those who know you (hence that leap of faith is a little easier) and can also potentially fill the gaps on taking a feature film to market.
If you're in the industry, the best place to look is inside your own network. Screen Australia also has grant programs.
The amount of money involved is also very small for a lot of investors. They still want to do their due diligence before they invest - the problem with small investments is the amount of time and effort involved is sizeable compared to the amount being raised. Another reason why this is easier if they already know you.
Crowd funding, where you pre sell groups of tickets to the movie, is also an option. It's not yet a legal option in Australia for anything involving a future profit share.
Giving back to the crew......
A share of future profits is a good idea, as it can help motivate people to go the extra mile for what is still a tight project.
A share of future profits can help achieve that. In technology that's done via an "employee share scheme". That could work here, or an employee bonus pool that's paid out in receipt of those profits.
How do I structure it?
Go find the investors first. Once you know who they'll be, the legal form of the entity that will receive the money, produce the film and take the proceeds will become a lot clearer.
The questions you'll need to be able to answer when you take this to your advisors will be as follows:
- Who owns what % of the venture (the film director, the investor, the production company and the crew).
- Who owns the rights to the feature film (effectively the intellectual property). A lawyer experienced in the film industry will be helpful here
- Will the investor demand a corporate structure? That is likely. Having a separate structure also makes it a lot easier (and far more transparent) to measure future profits.
- Will the production company take a management fee during production, or is their remuneration their % of the venture (or a % of both).
- What's tax effective for all of those involved
Many lawyers will tell you they know enough about the tax law to cover this last part - in practice this is often not the case. I find the best combination is a lawyer and a tax accountant who work together to give you comprehensive advice.
There will be nuances of this unique to the film industry, which I'm not an expert in. However, any time you're looking for "other people's money" to fund a high risk venture, there are patterns of human behaviour that can be applied across industries.